2020 SCIENCELINE

O nline J ournal of A nimal and F eed R esearch

Volume 10, Issue 1: 41-52; January 25, 2020

ISSN 2228-7701

ASSESSMENT OF DAIRY VALUE CHAIN SUSTAINABILITY,

CONSTRAINTS AND OPPORTUNITIES IN AKSUM, CENTRAL

TIGRAY, ETHIOPIA

Godadaw MISGANAW

University of Gondar, Ethiopia



Email: godadaw@gmail.com

^Supporting Information

ABSTRACT: Describing the sustainability of dairy value chain and showing the clear gaps of the sector is

important for bringing continual improvement that can support the livelihoods of dairy farmers and the

wellbeing of environment. To facilitate a balanced practice on the three pillars of sustainability (people, planet

and profit), a regular updating of the existing situation of dairy production is crucial. Therefore, the objective of

this report was describing the sustainability of dairy value chain in Aksum district, and shows clearly the gaps

of the sector that needs urgent action for continual improvement. Desk study for gathering secondary

information was employed. Different analytical tools were used to analyze and present the result. In Aksum,

milk is produced by mainly smallholder farmers, dairy cooperatives and few commercial medium scale farms.

The production system is operated by gender inclusive system which is in line with sustainable dairy. The

production potential of milking cows is very poor that is mainly due to poor genetic makeup and management

system. The common feed is roughage that causes to the low production performance (poor economic

viability) and high greenhouse gas emissions from enteric fermentation (risky for environment). The highest

value addition, risks and costs are belonged to producers but the high share of margin is for processors and

retailers. Therefore, this unfair share of profits, costs and risks is not a good sign of sustainable dairy

development. Hence, an attempt to improve the dairy sector should consider the three pillars of sustainability.

Keywords: Dairy value chain, gender inclusive, smallholder farmers, Sustainability

INTRODUCTION

Sustainable dairy farming refers to a system based on three pillars, which are environmentally sound, socially responsible

and economically viable. Sustainable dairy farming requires a commitment to continuous improvement, which means

that performance gaps are identified and addressed, and actions taken must maintain an appropriate balance among the

three interdependent pillars of sustainability (Allan et al., 2017 ). General improvement of crop and livestock production

practices can also contribute to climate adaptation due to improved resilience of animals and increased farm productivity

and income; which means all pillars of sustainable farming would be considered (Marion et al., 2016 ).

Dairy farms in Ethiopia known by low milk production on average about 1.7 liters per cow/day (Yilma et al., 2011)

and poor reproductive performance. Therefore, improving general dairy management, such as breeding, feeding and

animal health, will lead to increased efficiency of dairy production (economic viability) and a decrease in greenhouse gas

(GHG) emissions to the environment (Gerber et al., 2013). In Ethiopia’s Livestock Master Plan, crossbreeding with exotic

dairy breeds, and AI and synchronization, combined with better feed and health services is already in the development

roadmap for dairy farming (ILRI, 2015 ). This is a good kickoff of sustainable dairy development in the country. Domestic

demand of milk is projected to grow by 47% towards 2020 (GTP II, 2015). This can offer chances for the dairy farmers to

increase their income from selling dairy products and enhance their livelihoods.

Efficient milk production is a key to sustainable development of dairying. In Tigray regional state, there are about

862,441milking cows. The average lactation performance of the cow was 415 and 1712 litres of milk for local and

crossbreed cows respectively (CSA, 2016 ). Milk is a vital cash income sources for household consumption expenses.

There are many opportunities for the development of sustainable milk production including the presence of suitable agro-

ecology for the realisation of potential dairy production and the enormous market potential for dairy products

(Haregeweyni, 2015 ).

However, information is scant on the existing situation of dairy production from the three pillars of sustainability

point of view; which is important for researchers and policy makers to set out improvement considering people, planet

and profit. Therefore, this study focused on reviewing and analyzing of different secondary information to describe the

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Citation: Misganaw G (2020). Assessment of dairy value chain sustainability, constraints and opportunities in Aksum, Central Tigray, Ethiopia. Online J. Anim. Feed Res.,

10(1): 41-52. www.ojafr.ir

magnitude of dairy production sustainability and clear gaps of the sectors in Aksum district which needs urgent action for

continual improvement.

MATERIALS AND METHODS

Description of study area

The study was conducted in central Zone of Tigray regional state. Aksum is the capital city of the zone and located

in Northern Ethiopia. Aksum is situated 1024 kilometres far from Addis Ababa the capital city of the country (Figure 1).

The altitude of the zone is mainly falls within the category of 2000 to 3000 meters above sea level. A Large part of the

district receives mean annual rainfall ranging from 400 to 800 mm. The mean monthly maximum and minimum

temperature of the zone are 30⁰c and 10⁰c, respectively. The district has the largest human population in the region.

Tigray region has a total of 4,791,341 cattle, and 18% are milking cows (CSA, 2016 ).

Figure 1 - Map of Central Zone of Tigray (Aksum)

Data collection

This study was mainly done based on the secondary information from others work such as articles and institution

papers from an internet search. Besides, personal experience and practical field visit were employed to generate the

information.

Data analysis

Both qualitative and quantitative methods of data analysis were employed. For qualitative data, PESTEC (Political,

Economical, Social, Technological, Ecological and Cultural) and SWOT (Strength, Weakness, Opportunity and Threat)

analytical tools were used to analyze and describe the strength and weakness of dairy value chain in the area. Problem

tree was also applied to identify the core problem, its causes and effects of milk production. Narrative description was

used to assess the sustainability profiles of dairy production from People, Planet and profit point of view (3p profile). For

quantitative information, different economic parameters have used to find out thedistribution of added value and share of

margins among dairy value chain actors.An economic parameter like gross margin was used to analyse the benefit share

and added value of dairy chain actors in the area. The gross income was estimated by subtracting the cost price of the

product/unit from the sale price (revenue) of that product. Or in short:

(KIT and IIRR, 2008). A gross margin (GM) shows the percentage of the actor’s revenue that is gross profit per unit of

produce and was calculated as follows:

(KIT and IIRR, 2008)

Added valueis the difference between the price the actor pays for the produce, and the price she or he sells it for. It

was calculated as follows.

(KIT and IIRR, 2008)

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Citation: Misganaw G (2020). Assessment of dairy value chain sustainability, constraints and opportunities in Aksum, Central Tigray, Ethiopia. Online J. Anim. Feed Res.,

10(1): 41-52. www.ojafr.ir

Like gross margins, the size of the value share also reflects the number of costs and risks appear in the product flow

by that actor. Value share was estimated by using the following formula:

(KIT and IIRR, 2008)

RESULTS AND DISCUSSION

Description of dairy value chain actors

In central zone of Tigray, milk production is mainly carried out by many smallholder farmers, few medium scale

commercial farmrs and cooperatives. Dairy cooperatives in Aksum and Adwa town was composed from some smallholder

farmers and college graduated youths (Misganaw et al., 2017). Tsehaye private dairy enterprise is one of the commercial

dairy farm and act as producers, milk collectors from the nighboures, processors and wholesaler/retailr (Figur 2). Private

milk and milk products shops are also play an important role in the distribution of milk to the consumers. The detailed

description of available dairy chain actors is depicted in table 1.

Available supports for dairy sector in Aksum

All milk producers are fully dependent on the support of districts livestock office and some private veternary clinics.

Besides, Dedebit Credit and Saving Institution (DCSI), Livestock and Irrigation Value Chains for Ethiopian Smallholders

project (LIVES), Aksum University (AKU) and Aksum Research Center (ARC) are also involved the support of milk

production in Aksum. Most of these supporters provide inputs and skills that help to realize sustainable dairy development

in the area. The detail functions of supporters were presented in table 2.

Table 1 - Key actors play role in milk production and marketing

No.

1

Actors

Functions

Remark/Output

Produce and supply fresh milk to collectors,

retailers and consumers

Smallholder farmers

Producing milk

Producing, collecting and processing

and then retailing milk products

Produces Pasteurized milk, Yoghurt & cheese,

and distribute it to consumers and hotels

2

3

Dairy cooperatives

Producing, Collecting and Processing

milk

Pasteurized milk, cheese, sometimes cream

& supplied to retailers

Tsehaye dairy enterprise

4

5

Private milk products shops Selling milk and milk products

Receive processed milk from processors &

fresh from farmers, &sell it to consumers

Cafes and Restaurants

Consumers

Selling milk and milk products

Purchasing milk & milk products from

different retailers

6

Consuming fresh and processed milk

Sources: (Aksum University, 2016; Misganaw et al., 2017; Yaynishet et al., 2018)

Table 2 - Key supporters play role for sustainable dairy production

No.

1

Supporters

Functions

Remark/Outputs

 Train and advice farmers, cooperatives and retailers.

 Transfer information and technology,

 ProvidingAI and health service through experts

They offer credit for

Aksum Livestock

Office

Providing extension

services

Dedebit credit and

saving institute

(DECSI)

Providing financial

source

2

3

4

 farmers to purchase breeds, drugs,

 Cooperatives and retailers as initial capital

 Organizing farmers in a cooperative, providing technical

skills and some processing equipment’s as starting point

 Support producers and processors through research

findings on constraints, quality assessment, breed

improvement strategy

Providing training and

some inputs

NGO (LIVES, ILRI)

Aksum Research

centre

Disseminating research

findings to stakeholders

 Support dairy farmers in providing practical based

training

 Monitor and give professional feedbacks to processors

and retailers

Providing training,

involved in research and

community service.

5

Aksum University

Adwa Feed Processing Supplying formulated

 Formulate feeds for different class of dairy and distribute

it to the dairy farmers

It’s local NGO that control all foreign aid of the region and

influences value chain through infrastructure development

6

7

8

Factory

feeds

Relief Society of

Tigray (REST)

Aksum governmental

administration

Infrastructure

development

Policy, rules and

regulation

Try’s to control everything and influence the milk value chain

Sources: (Aksum University, 2016; Misganaw et al., 2017; Yaynishet et al., 2018)

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Citation: Misganaw G (2020). Assessment of dairy value chain sustainability, constraints and opportunities in Aksum, Central Tigray, Ethiopia. Online J. Anim. Feed Res.,

10(1): 41-52. www.ojafr.ir

Figure 2 - Dairy value Chain map in Aksum

Sustainability profile (3P)

Sustainability measure is an essential and newly adapted parameter for successful and continual operation of a

business. Any business will be sustainable if it is environmentally sound (Planet), socially responsible (People) and

economically viable (Profit). Hence, sustainability of milk production in Aksum is examined according to people, planet

and profit profiles, and discussed as follows.

Socially responsible (People) dairy production

The social responsibility component of sustainability in dairy production includes elements such as: improving and

maintaining the societies and communities where dairy food products are produced; good working and social conditions

are valid regardless of gender, age, personal preferences, or conviction; guaranteeing food safety and public health, and

improving and safeguarding animal health and welfare (Allan et al., 2017 ). Besides, farmers’ cooperation to improve their

bargaining power and existence of long-term relations among chain actors are important indicators for sustainability.

These elements were used as a reference to evaluate and assess the sustainability of milk production in Aksum districts

from the perspective of people profile (Table 3).

A) Gender involvement: Dairy cooperatives in Aksum and Adwa are principally established from many jobless youth

females, and few college graduated males (Misganaw et al., 2017). The role of women was high in the collection of milk,

processing and retailing functions in their cooperative. Similarly, the ten private milk products shops in Aksum and Adwa

towns owned by eight women and only two men (LIVES, 2015). But, in the case of smallholders, the contribution of

women is limited to activities performed around the home. Therefore, activities like cleaning dairy shade, caring dairy cow

and calves, milking, milk container cleaning and milk quality control, milk processing, butter selling were mainly

performed by females while selling milk, buying and selling dairy cows and feed collection and animal breeding were also

given principally for males (Zemeda, 2015). Similarly, (Gebrekidan et al., 2012) reported that in central zone of Tigray the

highest participation of adult female family members was observed in milking, making and selling dairy products and calf

caring in the urban areas. Besides, (Haregewoyni, 2015) also indicated that, men and women are moderately involved in

feed collecting, feeding, health follow up, cleaning and herding. Therefore, this active involvement of gender in dairy

production and marketing has a positive contribution for improvement and sustainability of dairy sector in the area.

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Citation: Misganaw G (2020). Assessment of dairy value chain sustainability, constraints and opportunities in Aksum, Central Tigray, Ethiopia. Online J. Anim. Feed Res.,

10(1): 41-52. www.ojafr.ir

B) Chilled labor: Family children boys were mainly involved in herding, watering and barn cleaning in both urban and

peri-urban areas of Aksum district. Family children girls had less involvement in the farms and none of the hired children

girls were involved in any dairy activities (Gebrekidan et al., 2012). In contrary, (Haregeweyni, 2015) reported that in

Central zone of Tigray, women and female child are highly involved in milking (72.5%), processing (75%) and selling of

dairy products (54%).Therefore, child labor is common in both urban and peri urban dairy production and marketing

system in the study area. However, sustainable dairy operation should be free from child labor.

C) Farmers’ cooperative: Dairy Cooperatives play a significant role in ensuring sustainable supply of raw milk to the

dairy industry by coordinating the flow of milk from their members and assisting them by providing the required dairy

farm inputs (FAO, 2011). Farmers’ cooperation is the main tool of empowering the bargaining power of dairy farmers in

Aksum and there are two female-dominated milk cooperatives in the town (Misganaw et al., 2017) which has its own

positive contribution for sustainable dairy production. Some of these contributions are creating fair value share through

improving their bargaining power, maintaining products quality, reducing market barriers and spoilage, improving

productivity.

D) Job creation for local community: Dairy production is therefore an important source of self-employment,

especially for rural households. A significant proportion of dairy operators also hire long-term or casual labour, which

creates employment among some of the poorest segments of society, including landless households in rural areas (Staal

et al., 2008 ).In central zone of Tigray, income and employment opportunity are common under market-oriented dairy

production system. The type of labour that employed in dairy producer around Aksum district is herder, milkier, cleaner

and processer. The availability of employment creation for herding of local and cross breed cow owners was 5% and 11%,

respectively. The average amount of salary payment for one hired labor in Aksum was 3906 Ethiopian Birr (ETB) per year

(Haregeweyni, 2015 ). Therefore, the dairy sector in Aksum is giving only a limited number of employment opportunities

for local communities with very low salary rate. Thus, this practice contributes negatively for the sustainability of dairy

production in the area. Because the communities in general and youths in particular are not well benefited from the dairy

sector through obtaining decent job and income; sense of ownership and support will be reduced and they try to devastate

or rob the resource.

E) Guaranteeing food safety and public health: In central zone of Tigray, milk production and prestige value were

the main purpose of keeping dairy cattle both in urban and peri-urban areas (Gebrekidan et al., 2012). Dairy products are

an essential component of the diet in the area. Fresh milk, yoghurt, butter, buttermilk, cheese and whey are among the

common milk products produced and consumed by the local communities. About 51% of the communities prefer to

consume milk either after boiling or souring, but, the rest proportion consumed raw milk which is not safe for health and

consumption. The major proportion (75%) of produced butter is sold and the remaining proportion is used for various

purposes like cooking and cosmetic. The income generated from the sale of milk products is used to purchase farm

inputs, food item, education materials for their children and health services for the household (Haregeweyni, 2015 ).

Table 3 - Summary of milk production sustainability performance from people profile

Sustainability indicators of

People profile

Current situation in dairy

sector

Remarks for sustainable development

Better gender

involvement

It should be kept the contribution of gender for sustainable

development

Gender involvement

Chilled labor

High chilled labor

Using chilled labor must be stopped in dairy sector

Even if their power and capacity is weak, a good start is

observed (gender inclusive jobless youths are emerging to dairy

sector in the form cooperatives)

Farmers’ Cooperative

Positive contribution

Job creation for local

community

Guaranteeing food safety and

public health

Minimal and

insignificant

The dairy sector can generate more jobs for the local community

and has to be pay a fair wage in order to be sustained

Especially in peri-urban areas, half of the community consumes

milk in a raw state. Therefore, strict quality measurement and

awareness should be made

Has potential risks

There are no any legally registered standard quality measures for milk and milk products in Aksum. Traditionally, the

communities have a mechanism to check the quality of milk products. This measurement is dependent on sensory

reflections. Color (pure white), Smell (not offensive or attractive odour), and taste are the major intrinsic fresh milk quality

attributes. The textureis also considered as intrinsic quality for yoghurt and cheese along with the others. Shelf life for

milk by-products released from processing units is even considered as intrinsic quality attributes in the area. Packing

materials for yoghurt, pasteurized milk and cheese is the extrinsic quality attributes used to check the safety of dairy

products in Aksum. Even for milk and milk products, there are no international quality management systems in the

country. But, the Ethiopian Food, Medicines and Healthcare Administration and Control Authority (EFMHACA) is the

National Regulatory Body of Ethiopia which is under the Ministry of Health. The Authority is responsiblefor ensuring the

quality, safety and efficacy of medicines and foods. This authority takes a sample of milk and milk products randomly at

producers, processors and retailers, and then checks it in a laboratory. Later, the feedback and corrective measures are

addressed through extension officers.

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Citation: Misganaw G (2020). Assessment of dairy value chain sustainability, constraints and opportunities in Aksum, Central Tigray, Ethiopia. Online J. Anim. Feed Res.,

10(1): 41-52. www.ojafr.ir

Environmentally sound (planet) dairy production

An environmentally sound dairy production system is characterized by the adoption of practices and technology for

more efficient use of natural resources per unit of animal food produced. Increasing production and improve

environmental impacts through reducing emission intensity of greenhouse gas and decrease air, water, and soil pollution

(ammonia, nitrate, phosphorus)are the basic elements of environmentally sound dairy production. Implementing practices

to improve air quality; manage manure in ways that ensure recycling of nutrients and energy, and minimize release of

gases with high global warming potential, and applying efficient grazing systems are also considered as environmentally

friend practices (Allan et al., 2017 ).

With regard to the environmental aspect, the analysis demonstrates that the most serious impact in terms of CO₂

equivalent per unit of product is due to the emissions of methane in the enteric fermentation of animals; these emissions

are directly connected to the type of diet fed to cattle. Besides, the production of feed and fodder, either self-produced by

the companies themselves or purchased from external suppliers have also contribution for the rise of emissions (Lucio et

al., 2016). In order to improve these aspects in terms of sustainability, among others, two key factors have to be

considered in conventional livestock breeding such as management of feeding practices and annual milk production per

hectare and per cow which means efficiency of production (Dillon et al., 2010 and O Brein et al., 2015 ).

A) Efficient use of resources and milk production: In Central zone of Tigray, the average milk yield potential of local

and cross breed cows was reported approximately 2 and 7 liters/day per cow respectively. The overall average lactation

length of local and crossbred cows was 193 and 233 days, respectively (Haregeweyni, 2015 ). Both the milk yield and

lactation length are under the standard performance of dairy cows. However, the cows will consume feed throughout the

year and contribute greenhouse gas emissions. According to Mulugeta (2015), the daily feed intake of local cows was

ranged from 7.8 to 9.4 kg in dry matter (5.28 to 7.07 roughage and 2.68 to 2.74 concentrate feed). Hence, we can

conclude that dairy animals in Central zone of Tigray are not as such efficient producers and there is a probability of high

greenhouse gas emission per unit of products. About 99% of dairy farmers have access to get Artificial insemination

service and the average conception efficiency was 85.5% (Haregeweyni, 2015 ). Possible reasons for these low

performances of dairy animals in central zone of Tigray are poor production genetic potentials of the animals and weak

management system such as feeding, health follow-up, housing and the like factors.

B) Efficient grazing system: Grazing was practiced by small farmers and mostly for local animals in peri-urban

areas, though there was a practice to some extent in urban areas. Majority of the urban dairy producers rely on zero

grazing but smaller proportions were used roadsides, hillsides and vacant plots for grazing to their dairy cattle

(Gebrekidan et al., 2012). Tigray region is a model for the country in the conservation practices and wise use of natural

resources; and Aksum is the one that found at the center of the region and known by conservation of natural resources

that mainly practicing intensive or semi-intensive dairy farming in urban and peri-urban area. This practice supports the

sustainability of dairy farming since damage of natural vegetation and soil compaction minimized. So that, lands that are

not suitable for crop production are used for animal grazing and the possible competition of land between dairy and crop

production will be reduced.

C) Feed types: The main feed resources available for smallholder dairy producers are grass and hay (Zemeda,

2015 ). The average amount of grass and hay produced in the dairy farmers from own lands were 184.75quintal /year.

Whereas the average amounts of grass and hay purchased from other farmers were 276.5quintal/year (Haregeweyni,

2015 ). Likewise, Gebrekidan et al. (2012 ) reported that, the major sources of feed for milking cows in Central zone of

Tigray were hay, crop residues, grazing, crop after math and non-conventional feedstuffs (like: ‘Atela’, kitchen waste and

weeds). Concentrate feeds were rarely supplied to dairy producers by the private feed traders in Aksum and Adwa.

Therefore, dairy cows in Aksum is mainly dependent on roughage feed stuffs that are not easily digested and converted to

animal products. The less digestibility of the feed would increase the time of enteric fermentation and methane gas

production and emission. The production efficiency of the animals will be reduced and their contribution for global

warming raised; these features negatively treat the sustainability of dairy production in the area.

D) Waste management: In central zone of Tigray, wastes from dairy farm such as manure, urine, wastewater, and

feed leftover were removed either manually as was the case in small and medium farms or through concrete drainages in

the case of large farms. Urban farmers were obliged to pile the cow dung outside of the farm which caused a nuisance to

the area, including the risk of local pollution due to nutrient leaching. But in the peri-urban areas, due to alternative uses

of manure as organic fertilizer, waste disposal was not well thought-out as a serious problem (Gebrekidan, 2014 ).

Manure from the urban areas is also supplied to a limited extent to the peri-urban areas, particularly to crop

producing farms. Hence, urban to peri-urban linkage is evolved informally and this should be recognized and strengthened

to promote nutrient recycling and benefit both urban and peri-urban producers (Gebrekidan, 2014 ). On the other hand,

waste disposal and its valorization thorough renewable energy production technologies (in particular the anaerobic

digestion of sewage) allow for not inconsiderable reductions in the Carbon Footprint of milk production. Otherwise, pilling

of manure hips outside of the dairy farm is also responsible for phenomena such as the eutrophication and acidification

of waters along with GHG emissions (Lucio et al., 2016).

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Citation: Misganaw G (2020). Assessment of dairy value chain sustainability, constraints and opportunities in Aksum, Central Tigray, Ethiopia. Online J. Anim. Feed Res.,

10(1): 41-52. www.ojafr.ir

Table 4 - Summary of dairy production sustainability from planet profile

Sustainability indicators of

Current situation in dairy sector

Remarks for sustainable development

Planet profile

Efficient use of resources and

milk production

Very poor production and

reproduction performance

Upgrading the genetic makeup of the milking cows could

help to them utilize resources efficiently

Little dependency on grazing,

urban producers uses zero

grazing system

Efficiently utilizing road and hill side grazing good

practice and must be maintained

Efficient grazing system

Instead of fully depending on less digestible feeds that

increase emission and reduces production, using

concentrate feeds has double advantage

Roughage feeds are common

diet

Feed types

Cultivating forages through intercropping system has

paramount important for sustainable dairy production

Cultivation of forage

Negligible due to land shortage

Poor manure handling system in

urban but used it as organic

fertilizer in peri-urban

A promising start was observed between dairy producers

and crop cultivars. Scaling up of this practices and

linkage must be considered for sustainable development

Waste management and

nutrient recycling

Economically viable (profit) dairy production

Food production must be economically viable: the producers and other food chain stakeholders must be able to

prosper and sustain investment, while consumers need access to quality food in affordable prices. From an economic

standpoint, sustainable dairy farming systems are therefore characterized by elements such as: enabling economically

viable food production along the food chain, while accomplishing social and ecological goals; ensuring that farm

operations obtain a fair share of the profits achieved in the food chain; supporting the ability of dairy producers to invest in

sustainability improvements; adopting innovation and approaches that help farmers deal with market volatility and hence

the prices of products and inputs (Allan et al., 2017 ). Economic viability was assessed by determining fixed and variable,

direct and indirect costs, with regard to all factors involved in the milk production process (Lucio et al., 2016). However,

due to information limitation; fixed cost is not accounted in the economic analysis of present study.

A) Revenue and variable cost of milk production

The average cost of production per liter of milk in Aksum was reported to be

6.5 Ethiopian Birr (ETB). As indicated from Figure 3, the revenue generated by milk

producers from a litre of milk was 12.5 ETB. Estimation of the average variable cost

includes cost of milk production, cost of transportation, labour, electricity, water,

detergents and gevernment tax, and it was 8.7 ETB for a liter of milk (Haregeweyni,

2015; Misganaw et al., 2017 ). Therefore, based on this information producers earn

a gross income of 3.8 ETB from a liter of milk.

B) Cost and selling prices of milk and milk products

C) For the producers, cost price includes the costs of feed, hired labor, transport Figure 3 - Average revenue and

gross income of milk producers in

Aksum

and opportunity cost. For the processors and retailers, the cost of milk purchased,

labor and transport costs were included. On top of these, processors have an

additional expenserelated to processing and packing. Producers sell a litre of milk in 12.5 ETB to processors and retailers.

Then the processor processed it into at least three by-products (fluid milk, cheese and yoghurt/curd) and sells it by (18.85,

68.3 and 20.5 ETB/unit respectively) on to retailers (Table 5). Retailers purchase fresh milk directly from producers and

the processed products from processors. Finally, the retailer sells these dairy products to consumers.

Table 5 - Cost and sale prices of milk and milk products

Items (measured ETH Birr/liter)

Total Cost price/unit

Fresh milk

Producers

Processors

Retailers

8.7

--

12.5

15.75

65.3

Pasteurized milk

Cheese/kg (4-liter milk = 1kg cheese)

Curd/Yoghurt

15.75

57.49

16.1

--

17.5

Sale Price/unit

Fresh milk

Pasteurized milk

Cheese

Yoghurt

12.5

--

16.8

25.75

72.35

21.65

--

18.85

68.3

20.5

Sources: Haregeweyni (2015); Yaynishet et al. (2016) and Misganaw et al. (2017)

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Citation: Misganaw G (2020). Assessment of dairy value chain sustainability, constraints and opportunities in Aksum, Central Tigray, Ethiopia. Online J. Anim. Feed Res.,

10(1): 41-52. www.ojafr.ir

D) Gross margins and value share

Based on the above data (Table 6), gross margin and value share were calculated and presented as follows. Gross

margins show the percentage of the actor’s revenue that is profit. It’s calculated as the gross income divided by the

revenue and multiplied by 100 (KIT and IIRR, 2008). We can see that producer have a gross margin of 30.4% from

pasteurized milk sales, while the retailers have highest gross margin 51.5 % from this product (Table 6).

Value share is calculated by the actor’s added value divided by the final retail price and then multiplied by 100(KIT

and IIRR, 2008 ).Note that the percentage sum of value shares equals to 100%, but the gross margins do not. In the fluid

milk, producers earn 48.5% of the final retail price, while the processors receive 24.3% and the retailers gain 27.2%. The

value share of producers is high (69.1%) in cheese product, but it is low for final retailers (5.6 %). In yoghurt, the trend is

the same ascheese; producers have a high-value share.

Like gross margins, the size of the value share also reflects the number of costs and risks appearred in the chain by

that actor.Also, the distribution of value share tells us something about the type of product. When the consumer buys a

product as it produced, such as fresh milk, then there has been little value added (only transport). So that, it expected that

producers have the highest value share (74.4 %) than retailers (25.6 %) (Table 6). Therefore, processors and retailers are

taking the profit/advantage on the expense of producers. This type of unfair share of values is not a good sign of

sustainability. Because, the major value is added by producers and the highest costs and risks of milk production are laid

on producers.

Table 6 - Gross margins and value share per dairy products among actors.

Sale price

(revenue)

Added

value

% Gross

margin

Products

Actors

Cost price

Gross income

% Value share

Producers

retailers

8.7

12.5

8.7

12.5

16.8

12.5

18.75

25.75

3.8

4.3

3.8

6.25

13.25

12.5

4.3

30.0

25.6

30.4

33.3

51.5

74.4

25.6

48.5

24.3

27.2

Fresh Milk

Producers

Processors

retailers

12.5

6.25

7

Pasteurized

milk

Producers

Processors

retailers

Producers

Processors

retailers

34.8

50

65.3

8.7

16

50

15.2

18.3

7.05

3.8

4.5

4.15

50

30.4

26.8

9.7

30.4

22.0

19.2

69.1

25.3

5.6

57.7

37.0

5.3

Cheese

Yoghurt

68.3

72.35

12.5

20.5

21.65

18.3

4.05

12.5

8

1.15

17.5

Constraints for sustainable dairy production

In the vicinity of cities or large towns of Ethiopia, milk producers have a ready market for their liquid milk. However,

in rural areas outlets for liquid milk are limited due to lack of accessible infrastructure that links producers with traders

and consumers. For example, a study in Tigray by the Regional Bureau of Agriculture (2006 ) has shown that about 45,000

litres of fresh milk/per-day is remained to be wastage due to lack of access to the market. Hence, the government should

take the lead in building infrastructure and providing technical service to the dairy sector (Tsegaye, 2010).

The significant constraints of dairyproduction in the Central zone one Tigray (Aksum) are high cost of inputs, low

volume of milk, lack of training access and low household income/low purchasing power. Unavailability of cooling

facilities for milk storing, long distance and rugged topography to reach the market, fluctuation of supply and demand,

low breed performance and limited transport access were also reported by (Haregeweyni, 2015) as the major hindering

factors for sustainable dairy production in Aksum district.Also, the high barging power of milk traders, weak relationship

of the dairy cooperative with its members, extended fasting period of Ethiopia Orthodox Church are also identified as the

significant factors affecting sustainable dairy production.

Moreover, the lack of milk processing facilities and skills, insufficient production area, poor sanitation, unpredictable

marketing system, shortage of water are treating sustainability of the dairy sector negatively (Misganaw et al., 2017).

There is also a problem of linkages among dairy value chain actors, and inadequate information on how to improve

animal breeding, marketing, and processing aspects that critically affect dairy production in the area. To analyze these

factors, Problem tree was used to identify the main problem, its causes and possible effects on milk production in Aksum

district (Figure 4).

Opportunities for sustainable dairy production

Dairy production in Ethiopia is expected to increase rapidly in response to the fast-growing demand for milk and milk

products resulting from growing human population and rising consumer income. Provided that, appropriate interventions

are made along the dairy value chain and given the considerable potential for smallholder income and employment

generation from high-value dairy products (Tegegne et al., 2013 ). Other opportunities for the development of sustainable

dairy production in Aksum are the presence of suitable agro-ecology for undertaking of potential breeds, growing of

different crops and forages. Presences of supporting institutions responsible for technology adoption of artificial

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Citation: Misganaw G (2020). Assessment of dairy value chain sustainability, constraints and opportunities in Aksum, Central Tigray, Ethiopia. Online J. Anim. Feed Res.,

10(1): 41-52. www.ojafr.ir

insemination, estrus synchronization and health services; the huge market potential of dairy products is also considered

as an opportunity (Gebremedhin and Dawit, 2013). As Aksum is the center of tourists, the hotels and restaurants require

a massive amount of fluid milk and processed dairy products to satisfy tourists demand (Getachew et al., 2016 ). As a

result, different cheese and butter types are regularly transported from Addis Ababa to Aksum town (Misganaw et al.,

2017 ). Also, the existence of many cultural and religious holidays that creates high consumption of animal products are

also favoured for sustainable milk production. To analysis and summarize the different constraints and opportunities of

milk production in the area, PESTEC and SWOT analysis is integrated and presented (Table 7).

Figure 4 - Problem tree of dairy production in Aksum

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Citation: Misganaw G (2020). Assessment of dairy value chain sustainability, constraints and opportunities in Aksum, Central Tigray, Ethiopia. Online J. Anim. Feed Res.,

10(1): 41-52. www.ojafr.ir

Table 7 - Analysis milk production and marketing constraints and opportunities in Aksum

SWOT

PESTEC

Strength

Weakness

Opportunity

Threat

- Insufficient production

area

- Lack of infrastructure

- Inadequate data and flow

of information

- Considerable

employment

generation

-Policy decision based

on scant information

-Transporting cheese

from Addis Ababa

- Presence of supporting

institutions

Political

Economical

Social

- Fast-growing demand

for dairy products

- Contribution to poverty

reduction

- Rising consumers

income

- High tourist flow to

the area

- High cost of inputs

- Low household income

- Low volume of milk

- High inflation rate

- Cash income sources

- Weak coordination of

dairy cooperative

High barging power

trader

- Contribution to

nutrition and health

- Rapid increasing of

human population

- the problem of linkages

among chain actors

-lack of training access

- Unavailability of cooling

facilities

- Provision of AI and

Health services

- Availability of

breeding

technologies

Technological

Environmental

Cultural

- lack of processing

equipment’s

Presence of suitable

agro-ecology to bring

potential breeds

- Suitable agroecology

for forage development

- Rugged and rocky

topography

- Poor sanitation

- Use of child labour

- Religion prevents

consumption of Animal

products during fasting time

- Celebration of holidays

by consuming dairy

products

- Existence of many

religion holidays

Long fasting period

CONCLUSION

Milk production in Aksum is operated by a different segment of smallholder farmers, dairy cooperatives and few

commercial private enterprises. The services and inputs provided by dairy sector supporters are overlapping one over the

other. Involvement of chilled labor, principally utilizing of roughage feeds and unfair share of margins along the chain

actors are main indicators against sustainable dairy production system. Many constraints that hinder the sustainability of

milk dairy production in Aksum are identified, and organized with the opportunities and strengths in PESTEC-SWOT

integrated matrix. As indicated from problem tree, the main problem for sustainable dairy production is low volume of

milk due to poor breeds’ performance and wastage of milk due to the lack of market outlets to the consumers and less

government emphasis for smallholder dairy farmers. The owner of this problem is the government office that involved in

breed improvement and infrastructure development. The effect of the problem is shortage of produces in the market,

unpredictable marketing system and results to low incomes of farmers which enforces them to live in a low living

standard.

Recommendations

Depending on the analysis of the report, the following recommendations are suggested for the leading supporters of

dairy sector

For livestock office

The local and central livestock office should present most productive breeds that could be easily adapted and

effective to the area. This could help to minimize carbon footprint of milk, increase income of producers and improves

efficient utilization of resources.

Facilitate the possible ways realization of infrastructure development to link the rural producers with urban

consumers through extending necessary infrastructure like accessible road.

Advising producers not to use child labor and children should be sent to school instead of giving task and duties in

dairy farming that impedes their mental development.

Facilitate dissemination of market information to producers and providing trainings to improve their bargaining

power and the share of margins.

For Aksum research center

Bringing and testing efficiency of modern breeding technologies (like, estrus synchronization, sex determination,

multiple ovulation and embryo transfer) that speed up the improvement of genetic potentials of dairy farmers, and

possible ways to change dairy wastes to worth should be considered

For Aksum university

Providing training on proper husbandry practices, production of quality milk, feeding and health aspects of dairy

cows.

Create awareness how to contribute and lead sustainable dairy production farming from the three pillars perspective

50

Citation: Misganaw G (2020). Assessment of dairy value chain sustainability, constraints and opportunities in Aksum, Central Tigray, Ethiopia. Online J. Anim. Feed Res.,

10(1): 41-52. www.ojafr.ir

DECLARATIONS

Corresponding author

Godadaw Misganaw; E-mail: godadaw@gmail.com

Acknowledgement

The author would wish to acknowledge Mr. Biruh Tesfahun, Mr. Demeke Haile and Mr. Girma Gezimu for their

incredible support in the development of this manuscript

Author’s contribution

Biruh T. and Demeke H. participated in the design of study and Girma G. critically revised the manuscript for

important intellectual contents

Competing interests

The author declares that they have no competing interests.

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